Type I transglutaminase is the enzyme that catalyzes formation of the crosslinked structure of the cornified envelope. Appropriate timing of onset and level of transglutaminase activity is absolutely required to achieve normal terminal differentiation. Abnormal activity of this enzyme leads to debilitating disease. For example, reduction in type I transglutaminase activity is the underlying defect in the disfiguring disease, lamellar ichthyosis. Previously, activity of this enzyme was believed to be solely controlled by the level of calcium in the extracellular environment. However, we recently identified a novel protein that is selectively expressed in the differentiated epidermal layers. Our preliminary studies suggest that this protein, TIG3, may control the timing and extent of activation of type I transglutaminase. We show that vector-mediated overexpression of TIG3 in keratinocytes enhances envelope formation. Our preliminary results indicate the remarkable finding that TIG3 preferentially activates type I transglutaminase activity by a direct interaction with the enzyme. A central goal of this proposal is to assess how this is achieved at a molecular level. Our workinq model is that TIG3 levels increase during keratinocyte differentiation, and that TIG3 then modulates transglutaminase activity to catalyze comeocyte formation and complete terminal differentiation. As TIG3 represents a new keratinocyte functional family, there is a great deal we do not understand about its function. The studies described in this proposal are designed to gain insights into its mechanism of action. An innovative aspect of this work is the characterization, using state of the art methods, of a new, completely novel, potentially important effector of keratinocyte terminal differentiation. We propose four aims designed to obtain fundamental information regarding TIG3 function. Specific Aims 1 and 2 are designed to investigate the TIG3 mechanism of action and to identify important functional domains within the TIG3 protein. Specific Aim 3 is designed to assess the importance of TIG3 subcellular distribution for function, and Specific Aim 4 is designed to investigate the TIG3 role in vivo.